Construction output up by 8% in May after months of decline

Construction output increased by 8.2% in May 2020 compared with April 2020, rising to £8.2bn, though output remains at a substantially lower level than normal compared with the ONS all-work construction output series prior to March 2020. The lower levels of output are underscored by total construction output in May 2020 being 38.8% (£5.2bn) lower in comparison with the February 2020 level, which was before the impact of Covid-19.

The rise in output in May follows the record decline of 40.2% in April 2020. Construction output also fell by a record 29.8% in the three months to May 2020, compared with the previous three-month period; this was driven by record falls of 30.3% in new work and 28.9% in repair and maintenance.

Following the large record monthly falls in April 2020 across all construction industry sectors, in May 2020 there was monthly growth across all sectors apart from public other new work and public housing repair and maintenance. The decrease in new work (30.3%) in the three months to May 2020 was because of record falls in most of the new work sectors; private new housing and private commercial were the largest contributors, falling by 42.5% and 29.5% respectively.

The decrease in repair and maintenance (28.9%) in the three months to May 2020 was because of record falls in all repair and maintenance sectors; the largest contributor was private housing repair and maintenance, which fell by 39.8%.

The industry will be hoping that the 8.2% rise in output in May is the start of construction’s recovery from the Covid-19 crisis, however with many firms still with staff on furlough and the summer holiday period just starting, the rise is more than likely an indicator of the industry starting work again after a long period of enforced inactivity due to lockdown.

Many offices in the engineering consultancy sector remain closed or partially occupied though staff at many of the larger firms are continuing to work from home as they have done since the beginning of lockdown. The ONS construction output figures for the summer months and beyond will be far more indicative of a sustained recovery in the sector and industry observers will be looking to those results as a better barometer of the health of the construction sector.

The ending of furlough for many construction firms will bring new financial challenges if workloads do not begin to rise. It’s absolutely crucial therefore that the government’s promised and much-vaunted construction and infrastructure pipeline starts delivering real projects and soon in order to give the construction industry the kickstart it so desperately needs.

Click here to view the latest ONS construction sector update.